Reader Mailbag: Word Processing Middle Ground

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.1. Mess of debt and taxes2. Renting out a room3. Settling on retirement philosophy4. Long games5. Hotel disappointment6. Future state retirement benefits7. Lacking the “spark” for change8. Taxes and online work9. Renting for long road trip10. Caucus thoughts

When I’m writing, sometimes I write in Microsoft Word and other times I write in a normal text editor. There are things about both that I do not like – Word often interferes too much, and the text editor interferes too little.

I’ve tried lots of writing programs over the years and they all fall on one side or the other of that fine line I’m always looking for. There are some online text editors that are very close, but there are a lot of things I write that I don’t feel good saving online.

One day, I’ll find the perfect program. Until then, I’ll just switch back and forth between the two options I have now, depending on my task.

Q1: Mess of debt and taxes
I’m a 29 year old woman. I was in a relationship for a number of years with someone who was horrible with finances. There are a few issues regarding some financial decisions that I made that will result in my tax bill being quite large. The first thing was, I let my desire to make him happy overshadow my common sense and acquired a large amount of credit card debt in my name. I broke things off and he, of course, left me high and dry to handle the large credit card bills alone. I just didn’t make enough money to pay off all of the debt on my own.

There were quite a few credit cards, so I made the decision to stop making payments to the larger cards and paid off the smaller balance cards one by one. Then I reached settlement agreements with the few larger cards. I’m going to have to pay taxes on the forgiven amount, around $17,500 in total, which is the first item that will affect my tax bill.

The second issue is I bought a house, ugh, if only I could go back. Anyway, I ended up doing a short sale and roughly $10K was forgiven by the lender. Also, I got the $8K tax credit and didn’t live in the house for 3 years, so I believe I will be required to pay that back as well. The last piece of the puzzle was a 401K loan. I took it out for the down payment on the house, because I thought my job was secure (I had worked for the same company for 7 years). Then in October my company decided that they no longer wanted me to work remotely and asked me to move back to San Diego, I live in Milwaukee. I respectfully declined, since the reason I moved was to reduce my living expenses and to be closer to family.

No longer working for the company meant I either had to pay back the 401K loan, which I didn’t have the savings to do after dealing with all of the credit card debt and the expenses associated with keeping my house and property in shape while I was trying to sell it. I transferred my 401K into a Fidelity account, the loan was paid back but I’ll still have to pay taxes on the $13K that I still owed on the loan.

In summary, I have to pay taxes on the $17,500 in credit card debt that was forgiven, the $10K that was forgiven by the mortgage lender, the $8K tax credit and the $13K 401K loan. Obviously, this is not a pretty picture but it’s the last financial hurdle leftover from my previous poor financial choices. I’m planning to hire a tax accountant to help me make sure I get every possible deduction, but I know it’s still going to be a hefty bill. I’m still unemployed, so paying it back won’t really be possible currently but I’m hopeful I’ll get a new job before I file my taxes.

My question is about whether you think I should use the money I rolled over into a Fidelity account to pay off as much of my tax bill as I can. I only have about $13K, so it would wipe out all of my retirement savings and I’d still owe more. Obviously, I won’t use the money in my 401K if I’m still unemployed, but assuming I’m employed and I’m able to get some savings together would you recommend I use my 401K money to pay down my tax bill? Or should I just set up a payment plan and not touch my 401K? I recently began a new relationship with someone who makes much smarter financial decisions, luckily, and I want to take care of my financial issues sooner rather than later so they don’t hinder the progress of our relationship (he’s aware of my pending tax issues and the past poor financial choices I made). I just want to make a smart decision in handling this last issue and would like some advice. What do you think I should do?
– Monica

If I were you, I would set up a payment plan as soon as possible so that you’re not paying anything late. The EFTPS program actually makes this pretty easy. You can get started with EFTPS here.

Believe it or not, even though they have a bad reputation, the IRS is often willing to work with taxpayers if they’re also willing to play ball.

It sounds like you’re trying to make this right and being proactive about it. You’ll be fine.

Q2: Renting out a room
I bought my home 2.5 years ago and have rented a room to a friend for most of that time. I anticipate that my friend/roommate may want her boyfriend to move in with her sometime soon. I’m not opposed to this as it would be another person to split bills with and he is a nice guy. What might be an appropriate way to think about how to charge them? The current deal is $500/m plus 1/2 utilities (up to about $120 per person in winter or summer, more like $60 per person the rest of the year). He would be living with her in the room she’s in now, so not really taking up more space in the house but it doesn’t feel right to have him live there for the same rent that just she pays. On the other hand double the rent to $1000 plus 2/3 of utilities seems overly harsh. What should I consider when trying to find a fair middle ground here?
– Jill

I am always uncomfortable with situations where there’s money and friendship involved, particularly when one person is the lender (you, here, in essence) and another the borrower (your friend, in essence). You always have to tread carefully in these situations.

If I were you, I would not double the rent. Are they going to be using any more real estate than they were using when it was just her? How much more? I’d think about that and raise the rent proportionately, if at all. You may also want to think about property taxes and such – if they’ve gone up a little, a slight bump in rent might be appropriate.

If you do raise the rent, I’d explain exactly why in very clear terms. If you’re clear about why you’re raising it, particularly when there’s now an additional renter in the equation, you should be fine.

As for the utilities, I think equal shares among all of you is fair. All of you are going to be using energy, heating, cooling and so forth. Those bills will go up.

Q3: Settling on retirement philosophy
I am having somewhat of a philosophical crisis with regard to saving for retirement in general as well as the specifics involved with being overseas.

First the general: In reading many of your mailbags, you often praise the tax-advantaged instruments (either tax-deferred or those with reduced or no tax on withdrawal) for retirement savings while at the same time pointing out the inherent problem with trying to guess future tax rates, future income and other conditions which would affect the choice. Also complicated the thought process are the various options for actually investing the retirement money: funds, bank accounts, pension plans incl. annuities etc. I was feeling confident with my choice but I feel like the fees are too high to justify the continued investment in front-load mutual funds, not to mention the fact that active funds rarely beat the market. Finding ETFs for retirement funding is next to impossible here. Maybe the correct path would be retirement insurance/pension plan, but they may be too conservative.

The path I am on now is investing in a fund-based “Riester-Rente”, which to summarize is a grant-aided annuity plan. The grant essentially acts as an alternate tax deferment mechanism, but is otherwise similar to a traditional IRA in most respects. The major problem, though, is that if one is not taxed in Germany during retirement, any grants and additional tax deductions provided must be paid back. Since I can’t even guarantee that my family will be in Germany much longer than another 5 years or so (gotta go where the work is ;-) ), I cannot see investing 30 years into a tax deferred instrument only to lose that significant advantage in the end. The other issue is that the invested capital is simply lost if I were to die after retirement, similar to many annuities in the US.

I think, in the end, the major problem is information. I try to approach things empirically and I think this may not be an empirical question, but rather an emotional question about motivation. I am just unsure of the correct way to go. What is the correct general philosophy when planning for the future?
– Carl

I agree with you that the major problem is information, both in the sense that we have imperfect information concerning the world around us and no information concerning what unexpected events will happen in the future.

For my own retirement, I’m hedging my bets. I have money both in pre-tax investments (401(k)s and the like) and post-tax investments (Roth IRAs).

We don’t know what the future holds, so I think that diversity is the best option. If you have retirement money in both pre- and post-tax investments, you’re doing the right thing, in my opinion.

Q4: Long games
Over Christmas break, one of my brothers brought home a board game called Twilight Imperium. We usually play a few games of Risk over break, but he told us that Twilight Imperium was way better. And he was right. It was awesome.

The only thing is that the games took about six or seven hours to play. Most of the time, I don’t have that much time to put aside for a game like that.

Have you played Twilight Imperium or any other game that long? How do you find time for it?
– Luke

I’m in a weekly gaming group that meets at the house of a close friend of mine. He has a spare table in one room of his home that he allows us to leave games on during idle weeks.

Thus, if we were to meet at 6:30 or 7 (which is our usual meeting time) and play Twilight Imperium (for example) for four hours, we could just leave the game on the table and return to it next week, finishing it up.

You could do this in your own home if you have an extra table to spare for a while. Set up a game, play it for a while, and leave it. Once upon a time, my roommate and I would do this with a chess board, leaving an ongoing game in the living room all the time and making moves after giving them sufficient thought.

Q5: Hotel disappointment
The recent new years eve my wife and I went to Disney World at the request of our son. I searched out a room online based on price, location, and reviews. When we got there the room turned out to be less than we had hoped for but served the purpose. We definitely would not recommend it to any of our friends. If we go again I will probably spend the $ and stay at one of Disney’s “value” resorts unless you or your readers have a better suggestion?
– Andrew

Any time you stay in a hotel without having actually visited it first, you’re taking your chances. A hotel might be beautiful in January, be sold in February, and be sort of run down by May if the new owners aren’t committed to it.

I generally give lower value to hotel reviews that are older than about three to six months. There is ownership turnover, staff turnover, and countless other things that can change a hotel’s standards and conditions in that timeframe.

How do you protect yourself against it? We usually chase price, but there have been times where we’ve either just refused to stay at a place or deeply regretted it.

Q6: Future state retirement benefits
I’m vested in the Florida Retirement System (FRS) for government employees. I no longer live in Florida, and am not contributing to the system or earning additional benefits.

I’m entitled to a small monthly pension. I intended to wait until age 62 before collecting it. At my current age (57), I could claim early retirement and receive a reduced pension. (The benefit amount is reduced 5% for each year my age at retirement is under normal retirement age, which is 62. Retiring at age 57 would reduce the benefit by 25% [5% multiplied by 5 years].)

I’ve asked friends in Florida (FRS retirees) whether they think this is likely to happen. One says she doesn’t believe so; the other urged me to file for retirement benefits now to lock them in. I’ve done some searching online but don’t have a good sense of the political climate in Florida.
– Marjorie

If I were you, I’d ask about the statements on that website in more detail. Their phrasing makes it unclear whether or not they would just deny new beneficiaries or they would cut benefits from applicants or both. I would clarify the possibilities of what they could do and then make a decision based on that.

One thing I’ve learned about government is that, if they think they can get away with it and be re-elected, they’ll tap any source of money they can find for their pork projects. I have found it best to never rely on something that is promised to me as a benefit by the government. If I get that benefit, great – it’s a wonderful perk. I plan as though it’s not happening, though.

You’re lucky enough to be in a situation where it won’t break you one way or another, but an awful lot of people aren’t that lucky. My advice is that if you’re older and reliant on such government services, live lean and get yourself in a situation so that you’re as independent from the money as you can be through savings. If you’re younger, fund your retirement.

Q7: Lacking the “spark” for change
I enjoyed your article this week on the motivation to improve one’s situation. In the article, you take the perspective of an individual who is attempting to help or motivate a third party. My question comes at this issue from the point of view of the individual being motivated.

Personally, I feel that I lack the ‘spark’ that you speak of, to instigate lasting change and yet there are changes that I wish to make in my life. I am seeking that spark.

How would you recommend capturing this energy for someone that does not come by it naturally, but wants to make changes?
– Nate

I think there’s a difference between something you’d really like to do and something that’s a life-changing situation.

I struggle with this myself. There are a lot of things that I’d love to be able to do with my life, but when the rubber hits the road, I can see clear separation between the goals that are just ones I’d like to do and the ones that I feel are really central to my life.

The ones that are life-changing don’t come along nearly as often as the others. I usually find that they burst into my life when I finally hit some sort of “bottom” related to that thing, where life grabs me by the chest and demands that I make a change.

Keep doing things and living life. Eventually, the important things will reveal themselves.

Q8: Taxes and online work
I’m trying to pay off my credit card debt and save a large chunk of money this year. I feel like I’ve cut all I realistically can at this point, so I’ve been searching online for ways to make extra money – even an extra $100-200 per month would help out immensely. I’ve come across options like MTurk and usability testing like usertesting.com which seem like they can provide the possibility for some additional income. My question is not around these two examples specifically, but online endeavors like this in general in relation to taxes. Most places put the burden on you to file your taxes, and I’m wondering if you think there is a specific threshold where it actually makes sense to invest the time into these things to make the extra money, or if the tax part of it is not worth the potential of a few extra bucks?
– Jeff

The tax part of it is pretty simple, especially if you use something like TurboTax. You usually enter one line on one form, your total taxes go up by some percentage of what you earned from the endeavor, and you either get a bit smaller refund or have to pay in a bit more.

The challenge with endeavors like MTurk is to recognize that you’re going to – at best – earn minimum wage for the time you invest. The advantage is that you can do it irregularly. You can do it during commercial breaks or when you have insomnia or when you’re using the restroom.

In some situations, I think things like MTurk can be a real help to people who need some extra income very quickly.

Q9: Renting for long road trip
Trent, just read a piece you wrote about renting a car for a long road trip a couple of years back. I liked the math, but how did you convince a rental car company to let you make that long trip? I am planning a trip from Missouri to Florida, where the car will set in a lot for a week while we take a cruise.
– Andy

It was fairly expensive, but the advantage was that it enabled us to take only one vehicle on the trip, whereas without the rental we would have had to take two vehicles. Once we did the math on the gas, maintenance, and wear on two cars, the single rental became the better option.

There really wasn’t much convincing with regards to the long-distance drive and the rental agency. They said “sure” and tacked on another fee.

In your situation, I would run the numbers and see if a flight wouldn’t be a comparable option. In our situation, we had a group of seven uf us traveling from Iowa to Texas, so flights from Des Moines to Dallas for seven would have been cost prohibitive. For two or even three people, the equation may be different.

Q10: Caucus thoughts
You’ve mentioned a few times that you attend the caucuses in Iowa. What is that experience even like? I know that the candidates campaign in Iowa for a long time before the caucus. What are your thoughts on that whole process?
– Will

It depends on whether you’re attending a Republican caucus or a Democratic caucus in Iowa. I’ve attended both.

With a Republican caucus, it’s pretty straightforward. All of the attendees sit in the same room. They announce the candidates, then volunteers are able to speak for five minutes on behalf of each candidate. After that, there’s just a ballot vote, followed by a very open counting of the ballots.

With a Democratic caucus, things are different – and much more entertaining. At a Democratic event, there are no chairs. Instead, everyone stands around while a representative from each candidate gets to speak for a few minutes. After that, you simply go stand beside the representative of your preferred candidate. Then, they dissolve all groups that have less than 15% of the people in the room and those people have to pick another candidate. During this process, there’s usually a lot of politicking and pleading and the room can get quite loud.

The process is really fun, though it does usually feel like the culmination of several months of craziness. If you’re registered for a party that is having a contested caucus, you’re absolutely inundated with political mailers, robo-calls, push polls, and other such things. That’s been our experience, anyway.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

As per question 1: Contact a tax accoutant immediately. If you were not solvent at the time of debt forgiveness, you may not have income for the debt forgiveness to report on your return. A qualified tax accountant will be able to determine your individual situation.

@question 9 and Trent: I always rent a car when I am in the US and I do like to drive long distances taking in different parts of your beautiful country. I always opted for “Unlimited Mileage” and never had a problem. So, I always thought, unlimited mileage meant unlimited mileage. They never added additional fees after I returned the car or anything. Are you guys talking about a different situation or are the rental companies changing their policies? I’d like to know because, I may plan another trip in the Fall this year.

Just curious which text-editor you use? In 2008 (Reader Mailbag #4) you mentioned using Notepad on Win32 and SimpleText on Mac. Later in 2010 (“So what free software do you use”), you mention upgrading to Notepad++. Are you still using these, or have you found anything better? Have you tried either of the Big Two (vim/emacs), and if so, what were your experiences?

Q2: Does your friend just stay in her room all the time, or are there common areas that you both use, and that her boyfriend will use too? If you will be sharing your kitchen, laundry machines, etc. with two people rather than just one, that’s an inconvenience for you, and I think it’s fair to increase their rent accordingly.

Here’s how I would think about it. Suppose your total cost for the house is $1500. Your friend is paying $500 of that, so right now you’re splitting the costs 2:1. When the boyfriend moves in, split the costs 2:1:1, so charge them $375 each, or $750 total.

Q4: Twilight Imperium is way long. And it’s for that reason that I don’t like it. It seems like I know I’ll lose in hour one and still have 3 more hours to actually see it happen! I will say this though: it will go faster the more experienced you get with it. We started where a game took 4 hours, but now it’s 2 hours. So there’s some hope there!

Q9 – &#4 Josh – Some car rental companies don’t allow driving out of state, or charge extra to do so. Also, Q9, you might want to talk to the agency to see whether you can get the round-trip rate but drop the car at your port destination, take a cab to the boat, then pick up a car upon your return, instead of paying for a week’s rental while the car is parked (and a week of parking fees). Or, two one-way rentals may be cheaper than paying the extra week + parking.

Q9 – I would be cautious about leaving a car (even my own) at a Cruise Port for a week. If anything happens to my own car, theft, dent, I’ll pay a deductible and have my insurance fix it. If you don’t get the right rental coverage and someone dents the rental while it sits for a week, the havoc of dealing with the rental agency will be a pain.

Valleycat1 has a great idea.

Elliot.org has a great blog on the hassel of rental cars and claims. (And other travel things… you might want to read that in case anything goes wrong on your cruise.)

Q5: I don’t have any specific recommendations for hotels in Disney, but I’ve usually had good luck looking at Tripadvisor for hotel reviews. The key, I think, is to pay attention to what people say, not just the numerical rating. Sometimes there will be things other people consider to be negatives that don’t bother me at all (like small rooms), things they consider to be positives that I would rather avoid (on my most recent trip, I learned that “exquisite attention to detail” is what I would call “insufferable snootiness”), and sometimes there are negative reviews that are just stupid (like “I tried to leave without paying the bill and they wouldn’t let me”).

We stayed at Comfort Suites in Kissimmee over New Years. They have a free continental breakfast w/ Mickey waffles, and there are also free shuttles available to Sea World, Disney, and Universal. I picked it based on Trip Advisor reviews, and we really enjoyed our stay.

Q1 Monica : Definitely talk to a tax expert. No, do not cash out your remaining retirement. As John mentioned, if you are insolvent then I don’t believe you owe taxes on forgiven debts. You sound like you’re probably insolvent. Again… talk to a tax expert.

Q2 Jill : I would make sure you check out landlord tenant laws in your area. Sometimes charging per person is illegal as it can be viewed as discrimination against families. However since it is your own home the landlord rules may differ. Just make sure you check the rules in your city / state and make sure you’re doing everything legally. I think splitting utilities 3 ways is entirely fair. Personally I wouldn’t raise the rent.

Q6 Marjorie: If you’re already vested in the benefit then I can’t see Florida cutting your pension. I’m not sure that would even be legal in any way. Generally its not legal but states have different rules on their govt. pensions. If they did try it then I’m sure they’d get sued big time. Personally I wouldn’t worry about it. Also if theres any chance they’d do it then you’d get hit by it in any case either this year or next or a few years from now.

Q8 Jeff : You owe taxes on work you do. Its really not much different than any other income. You would have to pay self employment taxes yourself though which are normally taken out by an employer. Do you want to make more money or not? If you want more money then you owe more taxes.

Q9 Andy : Every major rental company I now of allows you to drive to other states. They also will have options to do a one-way rental. If the car rental company in question doesn’t allow you to take a road trip then find another company. Driving to Mexico is a very different matter.

#5- Using a Travel Agent would be beneficial for this reason. In almost all cases, a travel agent doesn’t change the cost of a vacation at all for you and you get their experience and expertise. They get a commission of what you already paid to Disney. Disney pays the travel agent, not you. It’s a win-win for everyone really.

Q1, Monica. Consult a tax accountant BEFORE you set up a payment plan. Once you’ve set up the plan, you’ve locked in the amount you owe, and you should first try to get that amount as low as possible.

As another commenter said, there are exceptions to the requirement that you pay taxes on forgiven debt, and if you are unemployed and have no assets other than a 401(k) or IRA, you may qualify. (Basically, if you are insolvent and were incapable of repaying the debt that has been forgiven, then it may not be considered taxable income to you.)

Also, if some of these debts truly are your ex-boyfriend’s and you can prove it, have you considered making a legal demand that he pay his share?

Q2, Jill, here’s a formula you could use to arrive at a reasonable rent for your roommate and her boyfriend:

Call the entire square footage of the house TA (Total Area). Call the Bedroom & closet you and your tenant each occupy and your respective separate baths if any EOA (Exclusive Occupancy Area). Yours is LEOA and hers is TEOA (Landlord and Tenant). Call the common areas of the house SOA (Shared Occupancy Area). Call the fair market rental value of the whole house FMRV. This is what you could expect to collect if you were to rent the whole house to a tenant.

Your roommate’s new rent could be calculated this way:

Divide FMRV by TA to arrive at FMRV per square foot. (If your house would rent for $1,200 a month and has 2,000 square feet, this would be 60 cents/month/square foot.

Then add the TEOA to (SOA x 2/3). If your roommate’s separate bedroom/closet/bath is 200 square feet and yours is the same, then the shared areas are 1600 square feet, this would be 200 + (1600 x 2/3) or 200 + 1067 = 1267.

Multiply that by .60 = $760.20. That would be a reasonable rent.

As you can see, this splits the FMRV of the house (what you could collect if you were renting out the house to someone else) in such a way that each pays 100% of the per-square-foot rent for her exclusive area and splits the rent for the shared areas among the people using them.

I would split three ways any expenses that a tenant would be expected to pay if you rented out the whole house. This would include utilities, household supplies, minor repairs and possibly yard care, but not repairs that a landlord would usually expect to pay if the house were rented out as a whole.

@5: If you have a AAA membership, you can sometimes get a very different Disney deal, including the Disney hotels, than what is advertised to the rest of the general public. Both my husband and I and my mom and dad, traveling separately in different years, received excellent deals from Disney through AAA. Without counting the Disney property benefits, we couldn’t have stayed in an off-property hotel that was as nice as the one we stayed in for anywhere close to the price we paid to stay at Disney.

It’s not renting per person if you just raise the rent that would be paid if two of them occupied the room.
AnnJo’s formula is interesting, and a good way of thinking about it, even if you don’t find it worthwhile to do the exact math.

I would absolutely raise the rent. Unless the boyfriend would live in the bedroom and never come out, you definitely notice the difference.
I lived with two other people in an apartment for a while, and then one of them added an extra person to her bedroom. It might not have affected the rest of our sleep, but having another person using the kitchen, bathroom, and living room made a very noticeable impact on the rest of us.
I think somewhere in between her current rent and double it is fair, as it recognises that they are sharing the room space, but will both be using the rest of the house.
I doubt utilities would go up much, unless he is home during different parts of the day than the two of you already are, but that should definitely be split equally between all occupants.

In my opinion, if you want to create the spark for change, you have to start changing…even if it sucks at first. If there’s something you really want, but you have to sacrifice in order to get it, that’s going to be difficult. And it’ll be easier to do nothing, as Trent suggests, but that doesn’t get you any closer to what you want.

Make moves, educate yourself as much as you can about what it is you want, and how to get there. Then work through the pain of beginning. Once you find a little momentum, if it’s something you really do want in life, the spark will surely follow after you’ve gain some small successes.

Nothing worth doing is easy. Not really. And the people who have what they want in life are the people who are willing to go after it, no matter how difficult it might be initially. Waiting around for something to happen to you is worthless advice. There are plenty of people who wasted their entire lives waiting. Don’t be one of them.

Q5 I’ve been in a condo near Disney, on Disney property, and rented a house off property. If you are more than four people, my suggestion would be renting a house off site. We rented a four bedroom three bath and it was really nice to pull into a gated community and driveway and have to only walk 20 feet to the door versus 200 through a hotel lobby, up the elevator and down the hall. The kids had areas they could seperate to, there was a pool table and pingpong table in the garage, and a pool and hot tub out back. My MIL and BIL shared the cost with us and it made it easy to go our seperate ways on some days. It wasn’t “perfect” but it was very comfortable and nice. Moneywise it cost about the same as getting two hotel rooms for the week. Add that you could cook your own food and have snacks, etc. and it was a good time.

If it’s four or less, hotels are hotels and while I’m all for getting a good deal, you do get what you pay for. I enjoyed being on Disney property and felt their hotels do cater a bit more to kids than I’ve seen at other places, but you’re paying for that. The condo we rented off property was in a time share and was slightly more than a hotel room but also had a kitchen and similar advantages to the rented home. I’ve also had friends who said they went to the campground and found it a great value with a rented cabin (trailer? can’t recall specifically what they stayed in but they like it) and I’m thinking if we ever have grandkids we may try that option. Hope that helps if you’re planning a repeat visit.

Q2, I would split the utilities 3 ways and raise the rent a small flat amount. This ackowledges the fact that having another person there is somewhat of an inconvenience to you and gives the beau some responsibility. I had a situation similar to this and my roommmate ended up getting taken advantage of. We didn’t raise the rent and instead of the boyfriend splitting it with her out of courtesy, she ended up footing the whole bill.

I’ve rented many cars for multiple weeks and multi-state trips (I travel for my job). It can get really expensive, but it’s completely possible. I’ve never had a rental car agreement that limited it to a single state, in fact 3 of the 5 times I’ve rented a car in the last year I’ve returned the car in a different state than I picked it up in. No problems.

Look for weekly rates and ALWAYS get unlimited mileage. Another thing to look for is vehicle model. On most trips I get the cheapest available, but if you’re going to be putting a lot of hours into driving, it’s a good idea to step up from economy. An economy car from an inexpensive company like Fox or Budget will likely not have cruise control or some other features that can make driving a lot more comfortable for just a few dollars more per day.

Like the above posters, I’ve never had trouble with renting a car for a long period of time, or for travel in multiple states (and Canada, in one case). As long as you tell them what your plans are and get unlimited mileage, you’re usually fine.

Q #5- My daughter worked at disney for many years. We would go visit her often and enjoy the many discounts she got. BUT when it came to booking a room, we often stayed in kissimmee. My daughter was the one who told us about this great bargain. Kissimmee is not that far from the parks [10-15 minute ride], the rooms we stayed in [name brand places] were VERY nice and the rates were cheap compared to the disney rooms! We preferred to spend our money at the parks and eating out rather than top price rooms since all we did was sleep and shower in our rooms. Of course, sometimes you can get a great deal for something on site, but we really had no complaints about any of the places we stayed in kissimmee, and the prices were right!

Q6: The state leigslature can’t just make substantial changes to the pension plan and create a Gotcha!. They’re got to go through the whole ‘in the Sunshine’ process, which ends up giving you a fair amount of warning for any big revisions of the plan, and there’s an additional timeframe before implementation happens. IIRC, there was a full year between when changes to DROP were passed and when those changes took effect. So keep your FRS as it is right now, and just keep monitoring legislative actions. The Buzz political blog out of Tampa is a pretty good compiler of that kind of news.

Q2 – I would raise the rent, because as it was pointed out, unless he only lives in the bedroom, you’ll notice the difference.

I’ve been in your situation too where I rented rooms in my house out. It’s more than just the cost of paying my mortgage. I did all the upkeep and yard work too. Another person adds more maintenance. Your washer/dryer is being used more, the floors and carpets are being walked on more, doors are being opened and closed more, another pair of hands touching the walls (ie, the dirt that accumulates around light switches). If he only needed a place for a month or two, no biggie. But an extra person in a space for a year or so will make a difference.

Q1-I agree with the previous statements regarding the taxability of your cancelled debts. If you were insolvent just before the debt was cancelled you will have to report the income on your return but it probably won’t be taxable. Since it doesn’t sound like you have a lot of disposable income to pay an accountant, I would check IRS publication 4681 or call thier toll free number and ask. They will not set up a payment plan for you until the return is filed. And setting up a payment plan does not lock in a tax debt.

If I were you I would not take money from a retirement account to pay a tax debt, because of the early distribution penalty involved. The interest and penalties on tax debt aren’t more than you would expect to pay on a consumer loan. Nevertheless, I would make paying it off a very high priority.

Good luck in the future. You have a great attitude and it sounds like things are looking up for you.

Q6 – First things first: call FRS and ask them direct. They are there to serve YOU and usually the people at these systems are quite willing to help you understand issues. Plus they have had other people ask and are very familiar with the situation and with what benefits the legislature is considering reducing and by how much. Ask them how much underfunded they are, as it is kind of a moving target and underfunded by 10% or 20% is FAR different than underfunded by 40%.

Also ask them if they can prepare a statement for you comparing what they estimate your income would be if you retired now versus at age 62. Even if they can’t do this they can give you the information so you can do it yourself.

To decide: run the numbers comparing early retirement to waiting. You will have 25% less, but you will have that amount for five extra years and can invest it, be sure to also count the investment RETURNS onward past the point you WOULD have retired … until when you think you might need it (and maybe consider it an emergency fund). Consider if the retirement system has cost of living increases and how long it would take those increases to make up the difference of that 25% reduction.

A way to make this clearer is to lay out both choices with annual pension income over 15 or 20 years, calculating the amounts and COLA increases. Then compare the two and see how much more or less each alternative totals over time.

I chose to take an early retirement after running these numbers because there was not very much difference – but I actually retired. You will continue working and might even choose to work beyond age 62 so this could turn out to be a nice side investment.

Another factor I missed in my own calculations is something called Windfall Elimination Provision. WEP is a provision in Social Security that prevents you receiving both a government pension and social security. Not entirely, but effectively. So even though I worked enough years to qualify for a Social Security pension estimated at around $900+ a month, WEP will restrict what I can collect to less than $200 a month – a significant difference.

If you were planning to collect Social Security as well as the FRS pension you need to plan carefully. Maybe delay collecting Social Security as late as possible so that the amount is higher (the later you start collecting benefits, the greater the benefit amount). You should already be getting an annual statement of estimated benefits from Social Security, and if not then contact them and ask to get one. It will clarify that part of the equation a lot.

After you have calculated everything you can, set it aside for a week or two. When you take another look at it talk it over with a friend or financial adviser. Very often in explaining and discussing things with someone else they see aspects that you have overlooked and it can help a lot just to talk it out with someone before making a decision. Good luck!!

Q5 – use TripAdvisor but in addition to searching the latest info, also check for months when you would be traveling. So if you were planning a vacation for July, I would look at the recent ones plus last July’s reviews.

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